3.21.25 Washington Whirlwind; FICO's Devin Norales on 10 T Adoption; Who Owns Securities

Welcome to The Chrisman Commentary, your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

In today’s episode, we look at the latest happenings from Washington D.C. Plus, Robbie sits down with FICO’s Devin Norales for an interview on 10T adoption and benefits that are helping put more borrowers into homes. And we go through just who owns U.S. securities.

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Transcript

“Elon is firing Twitter employees with bad posture. I have a hunch I might be next.” If I have a sprained finger, I don’t need a heart and lung transplant. And if I did need a transplant, I wouldn’t want a florist doing it. For years, the CFPB has been accused of a “shoot first, ask questions later” mentality, taking drastic action when less would have been more helpful. Earlier this week new FHFA Director Bill Pulte fired several board members of Freddie and Fannie (including Mike Heid whom many of us know), and installed, among others, Christopher Stanley, X employee and a “DOGE Bro.” A person close to the situation told me that he found out about his appointment the same way we all did, reading the news! He lasted one day on the job and quit, rumored, in part, due to being Russian and having Russian bank accounts and not wanting the scrutinization. Bill Pulte, rumored to be an owner of a good chunk of X stock, yesterday eliminated Freddie Mac’s CEO, COO, and Human Resources. I can hardly wait for the FHFA to look at affordable housing. GSE turmoil and home affordability will no doubt be on the topics list for today’s Last Word. Brian Vieaux, Christy Soukhamneut, Kevin Peranio, and Courtney Thompson will also cover insights from the recent FED meeting, including interest rate outlooks and economic trends shaping the mortgage landscape. (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. Whether it’s using cash to purchase a home, debt consolidation, or a straight cash-out refinance, CoreLogic’s Precision Marketing’s data-driven insights pinpoint your best opportunities to retain and recapture your clients. Today’s has an interview with FICO’s Devin Norales on 10T adoption and benefits that are helping put more borrowers into homes.)

Jobs; executive available

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Lender and broker products, software, & services

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Freddie & Fannie: follow the money/follow Bill Ackman

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A few months ago, Axios’ Emily Peck published an article titled, “Bill Ackman Targets Trump with Bid to Release Fannie Mae.” For anyone in residential lending following the travails of Freddie Mac, and Fannie Mae, the article is worth the read.

“In the latest iteration of Bill Ackman's activist investing career, the billionaire hedge fund manager is using the power of his 1.5 million followers on X to try to influence one man in particular: Donald Trump. It matters because the president-elect is very likely to both create and destroy fortunes by executive decree.

“Huge sums of money can therefore be made if it's possible to influence Trump's actions, and social media has supplanted Fox News as the medium of choice by which to reach him.

“Ackman laid out a thesis for how he thinks the government should exit its positions in Fannie Mae and Freddie Mac, the so-called government-sponsored enterprises (GSEs). Such an action, he said, would benefit shareholders in the two companies, including himself.

“Ackman has held this thesis, and this position, for over a decade, during which period very little progress has been made toward releasing the GSEs back into the private sector. Nevertheless, Ackman hasn't given up hope. Being sure to tag the president-elect in his tweet, Ackman wrote: ‘I expect that in the second @realDonaldTrump administration, Trump and his team will get the job done.’"

“For the past few years, Ackman has been unusually quiet as an investor. As he explained in a letter to investors in 2022, his investment firm Pershing Square graduated successively from Pershing 1.0, where he used the ‘transactional activism’ playbook to push companies to take actions that would juice the stock price, to Pershing 2.0, where he joined the board and took more direct control of medium-sized companies like General Growth, to Pershing 3.0, where he takes a more passive stake in larger companies.

“Where it stands: Ackman's approach to his position in the GSEs is reminiscent of Pershing 1.0, but in this case, rather than seeking to pressure the board or the management of the companies he's investing in, Ackman is looking instead to get the president of the United States to act in accordance with his wishes. Ackman is aided in this quest by the power of his X account writ large, which in recent months has become loudly pro-Trump and pro-MAGA.

“Between the lines: The details of any plan to release the GSEs from government control get fiendishly complicated very quickly, as technocrats argue over such issues as liquidation preferences, credit risk transfer instruments, and corporate credit ratings. The result has been a quagmire and a continuation of government ownership for much longer than originally intended.

“The bottom line: Almost everybody in Trump's orbit likes the idea of releasing the GSEs in theory. The big question is whether Ackman can persuade the president that the government's fiscal balance, which includes hundreds of billions of dollars owed by the GSEs to the Treasury Department, is a function of bad accounting, and that the money borrowed should be considered to have already been repaid in full.”

Yes, hedge fund manager Bill Ackman recently suggested that there is tremendous upside to taking Freddie Mac and Fannie Mae private; housing experts argue such a change could increase mortgage rates further in an already volatile market. Critics are worried about the influence that Bill Ackman has over Donald Trump and how it may impact millions of homeowners and future borrowers.

Capital markets: who owns the outstanding securities

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Yesterday's economic reports were mostly in line with expectations, always a welcomed event for capital markets folks (who don’t like volatility). Existing home sales beat expectations to advance 4.2 percent in February to a seasonally adjusted annual rate of 4.26 million. Sales slipped 1.2 percent from one year ago. The median existing-home sales price rose 3.8 percent from February 2024 to $398,400, the 20th consecutive month of year-over-year price increases. The inventory of unsold existing homes climbed 5.1 percent from the prior month to 1.24 million at the end of February, or the equivalent of 3.5 months’ supply at the current monthly sales pace. Existing sales continue to run at a slow historical pace due to persistent affordability challenges.

New data from SIFMA reveals that outstanding U.S. Treasuries are nearing $29 trillion as of February’s close, with notable shifts in ownership. Foreign holders now account for 33 percent, down from 42 percent in 2019, while the Federal Reserve’s stake has declined from 23 percent to 15 percent, returning to pre-pandemic levels. Meanwhile, mutual funds have significantly increased their share to nearly 20 percent, up from 14 percent in 2022. Additional insights highlight the Federal Reserve’s changing role in both the Treasury and Mortgage-Backed Securities markets, with the latest FOMC statement indicating a slowdown in balance sheet reduction, which could stabilize these ownership trends. The overall Treasury market has surged from $16.7 trillion in 2019 to $28.6 trillion today, reflecting the rapid expansion of U.S. government debt.

Mortgage pricing is determined by supply and demand, and this week the Federal Open Market Committee chose to ease its grip on balance sheet reduction, softening the pace at which securities drift from its holdings. Beginning in April, the monthly Treasury redemption cap will shrink from $25 billion to $5 billion, while the $35 billion ceiling on agency debt and mortgage-backed securities (MBS) remains untouched. Any excess principal beyond this threshold will flow back into Treasuries, ensuring a steady pulse in the financial markets. Treasury redemptions will span coupon securities and bills, their rollovers carefully proportioned across maturities. Should agency debt and MBS repayments exceed the cap, the Fed will channel the surplus into the secondary market, spreading its reinvestments across a spectrum of Treasury instruments. With this measured shift, the central bank treads more cautiously, balancing restraint with liquidity, fostering quiet, yet steady, demand in upcoming bond auctions, and helping to absorb the swelling tide of supply.

After a volatile week that saw the 10-year hit a high of 4.34 percent on Tuesday to a 4.17 percent low yesterday as markets navigated stagflationary data and five central bank monetary policy updates, investors get a break today, barring any unexpected geopolitical headlines. There are only remarks from New York Fed President Williams later this morning. We begin Friday with Agency MBS prices little changed from Thursday evening, the 2-year yielding 3.94, and the 10-year yielding 4.21 after closing yesterday at 4.23 percent.

A company hired a new CEO. This boss wanted to get rid of all of the slackers.

One day, he saw a young man against the wall. He wanted to prove to everyone that he meant business.

The CEO walked up to the man and asked, "How much do you make a week?"

The man replied, "$400 a week. Why?"

The CEO handed the guy $400 in cash and shouted, "Here's a week's pay. Now LEAVE and don't come back. The man left.

Feeling pretty good about his first firing, the CEO asked an employee, "Who was that?"

With a grin, the employee replied," The pizza delivery guy."

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. This month’s piece is titled, “Mergers and Acquisitions Aren’t Going Away, and In Fact…” , “Natural Disasters and Economic Resilience.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2025 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)